August 9, 2019 | Crowdsucking

Garth Turner

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics.
Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Talish Girwarna was having a shower one morning not long ago. “I was unemployed then,” he told me this week, “and I was wondering to myself how entrepreneurs get rich. Then I got this idea.”

“I asked myself, ‘what does everyone need?’ and the answer was simple. Everybody needs money. So, yes, this was the obvious thing.”

For background, Talish is 33, has a young family, lives in semi-rural SW Ontario and now has a gig working in a metal fabrication shop. He has no experience or training as a financial guy. He has no investments. No income other than the factory job. Well, until now…

The big idea was crowdfunding. Talish figured that if people took all the money they piddle away on lottery tickets and, well, gave it to him that he could not only look after his own future but help to make some people into millionaires. And so was born The Retirement Fund.

This is the pitch

People helping people to become millionaires.At The Retirement Fund our goal is to harness the power of selflessness. People are generally kind, giving, and not afraid to help others. We’ve all seen this in many different areas all around the world. An average person becomes a local hero, someone donates a large amount of money to a good cause, or strangers helping strangers in times of need, distress, or disasters. These represent just a few out of the many, many examples of the kindheartedness of people.For the average income person, living life could sometimes feel like an unending chore. The same routine day in and day out to maintain what they have, keep food on the table and a roof over their heads. The Retirement Fund wants to help people take control of their lives, at least financially.The way we can accomplish this is through technology. Before there were crowdfunding websites there were fund raisers and donation events. But it’s easier now more than ever to get and give people money. It can happen in an instant, and we at The Retirement Fund want to be the catalyst for that.At The Retirement Fund we put a few things together to make this possible. Simply put, we are a crowdfunding Website that collects money from all subscribers, and everyone who invests gets paid.

It’s a compelling message: People helping people. Kindheartedness. Selflessness. Everyone benefits. How could this not be a good thing? Talish the local hero.

He wants you to give him at least $5 which goes into a PayPal account (in his own name, not an incorporation or trust). Multiple ‘investments’ and recurring deposits are encouraged. Then your name goes on a list. After 200,000 people pony up their five bucks (less 5% commission) the first person on that roster gets a big pot of money. It’s a classic pyramid scheme. Here’s his explanation of how you get your million:

“Your fund grows the same way that a lottery does. Your investment along with everyone else’s goes into a pool and once $1,000,000 is reached, the person at the top of the list is paid out and everyone moves up one spot. The more people that invest, the faster the $1,000,000 goal is reached. That also applies to the amount of money people invest. Meaning the more money one invests, be it one time or over a period of time, the faster the $1,000,000 goal is reached. There is an option to re-invest on a monthly bases automatically if you like as well. It’s like playing the lottery and knowing that you will win.”

Talish equivocated when I asked how many people had signed up in the few weeks his site’s been operational. He’s been promoting it hard – on Facebook, Twitter and even posting free ads on Kijiji. What about the money collected so far? No answer. And how about regulatory oversight or protections for the ‘investors’? “From my research,” he says, “all I needed was a PayPal account and then to build a site.”

Not so fast. The Retirement Fund sounds institutional, but isn’t. It’s his sole proprietorship, without any responsibility to people forwarding payments. And while that’s not uncommon with crowdfunding sites helping people out of tragedies or raising money for charitable causes, it’s different when the donation is called an ‘investment’ with the promise that ‘everyone who invests gets paid’. The factory guy may have strayed onto regulated turf.

There are rules for crowdfunding when it comes to financial products, Instrument 45-108 allows it, but the issuer needs to adhere to strict limits, plus provide every investor with an offering document, “that contains, among other items, the aggregate minimum proceeds of the offering, and a certificate stating that there are no untrue material statements in the Offering Document.” And this, too:

It must file a Report of Exempt Distribution on Form 45-106F1, together with the Offering Document and any additional materials within 10 days after closing of the applicable distribution; and

It may not close any distribution unless it has: (i) raised the aggregate minimum proceeds described in the Offering Document, and (ii) received from each purchaser a risk acknowledgement form which confirms the purchaser’s understanding of the risks disclosed in the Offering Document.

In addition, in Ontario only, non-accredited investors may not invest more than $10,000, and accredited investors may not invest more than $50,000, in all securities offered under MI 45-108 during any calendar year. Ontario requires each purchaser to confirm compliance with these investment limit rules on Form 45-108F3.

Hmm, and how would the CRA deal with someone at the top of the list being sent a cheque for a million? After all, it’s not inside an RRSP. So the funds would be taxable income. Fintrac might also be interested, since crowdfunding can be a dandy way to wash cash.

“There’s a caste system everywhere,” Talish argues, “and all I want to do is make a level playing field. I’m an ideas guy. All I want to go is get people to invest so I can make them richer, and me, too.”

What if he raises $900,000, not enough to send a million to anyone topping his list?

“The site says there are no refunds. My model is a lottery, so it’s the same as when people buy tickets. I just put it into a retirement fund.”

So, Talish, I ask, how is your own retirement plan going?

“Not so good. Because I’m busting my ass working, and I’d like to be home in my house with my family.”